A bespoke financing package from NEoT Offgrid Africa will boost the adoption of solar energy in Côte d’Ivoire, especially among unbanked households.


Philippe Ringebach

French firm NEoT Offgrid Africa (NOA) closed an innovative securitisation in March that will help to equip more than 100,000 households in Côte d’Ivoire with solar power. The project breaks new ground in the rollout of solar energy in Africa and sets a precedent for innovative financing that can make a significant difference to people’s daily lives.

NOA's parent company, NEoT Capital, worked in Côte d’Ivoire with Zola Electricity Côte d’Ivoire (ZECI), a joint venture between EDF and Zola Electric launched in 2012 to help African households swap energy sources such as kerosene and diesel for clean solar systems. ZECI has more than a million daily users in several countries including Tanzania, Rwanda and Nigeria.

Access to power

In Côte d’Ivoire, the plan was to deploy and maintain solar home system kits composed of solar panels and appliances through three-year rent-to-own contracts. The kits use roof-top photovoltaic solar panels that feed batteries to power lightbulbs, phone chargers, radios or televisions. The batteries have a lifespan of at least seven years, while the solar panels can be used for more than 20 years. Since many citizens are unbanked, monthly payments for the kits are made using mobile money.

As ZECI rolled out the rent-to-own scheme in Côte d’Ivoire, it realised fairly quickly that external financing could make a huge difference in terms of scaling. It got together with NeOT Capital, which was established in 2017 to invest in off-grid and renewable energy in Africa, and is owned by French investment firm Meridiam (as majority shareholder), EDF and Mitsubishi Corporation.

“There is huge need for access to energy in Africa, where you have millions of homes with limited or no access to electricity,” said Philippe Ringenbach, chief executive officer of NEoT Capital (pictured). “The way to [solve] this is [with] technology that can provide a stable energy supply and which is affordable. As the price of solar panels and batteries have dropped over the past few years, they are now accessible to much larger numbers of people.”

Taking on risk

NEoT Capital realised that the rent-to-own format was a perfect match for a securitisation and investigated how it could work in the context of hundreds of thousands of small users, without the usual frameworks around credit risk and pricing. NEoT Capital investment officer Zoé Mahieu, says: “Under the terms of our agreement, we would take [on] the credit risk of the customers. We worked together with ZECI, which had data from the rent-to-own scheme, and moved quickly to get banks involved from the beginning to ensure they were fully aligned on the way we assessed the credit risks and built out the portfolio.”

NOA mandated Crédit Agricole Corporate and Investment Bank (CACIB), Société Générale CIB and Société Générale Côte d’Ivoire (SGCI) to arrange the financing. Under the arrangement, SGCI makes a loan in local currency, which funds the financing on a monthly basis based on the needs of the portfolio. The loan was guaranteed by the African Development Bank (AfDB) and CACIB. Meanwhile, the team instructed Grameen Crédit Agricole Foundation to monitor social and environmental impact.

“None of this was easy or quick; we spent most of 2019 thinking about how the financing would work and getting set up and then ensuring we had enough credit history to make sensible pricing decisions,” says Mr Ringenbach. “It really was a first-of-a-kind financing, so we were required to build the idea from the ground up.”

Laying groundwork

The company set up a special purpose vehicle to channel the financing and manage the receivables, and the deal was completed at the beginning of this year, with deal terms remaining confidential.

“It was quite a journey to get there, and certainly you need to adapt to local conditions. But now we have established the principles, there is no reason why we cannot replicate this form of financing across Africa,” says Mr Ringenbach. “We have been in contact with many banks and private investors who are interested in scaling this kind of solution, and it may be that over time we are able to develop a new asset class – as well as help millions of people in Africa produce clean, affordable energy to power their homes.”


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